Publication:
The ambiguous competitive effects of passive partial forward ownership

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URI: https://hdl.handle.net/10016/36705
ISSN: 0038-4038
DOI: https://doi.org/10.1002/soej.12599
UXXI: AR/0000032183
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ambiguous_SEJ_2022.pdf (3.04 MB)
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2022-10-01
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Wiley
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Abstract
In a two-tier industry with an upstream monopolist sup-plier and downstream competition with differentiatedgoods, we show that passive partial forward ownership(PPFO) has ambiguous effects on competition and wel-fare. When vertical trading is conducted via linear tariffs,PPFO is pro-competitive and welfare-increasing. Whileunder two-part tariffs, it is anti-competitive and welfare-decreasing. These hold irrespectively of the degree ofproduct differentiation, theobservability or not of con-tract terms, the mode of downstream competition, andthe distribution of bargaining power between firms.
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Competition, Linear tariffs, Partial passive forward ownership, Two-part tariffs, Welfare
Bibliographic citation
Papadopoulos, K. G., Petrakis, E., & Skartados, P. (2022). The ambiguous competitive effects of passive partial forward ownership. Southern Economic Journal, 89( 2), pp.540– 568.
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